Deal agreed for Euro bank Fortis

A deal to partially nationalise European banking and insurance giant Fortis has been agreed.

The move came after talks between the European Central Bank and the Netherlands, Belgium and Luxembourg.

Ministers from the three countries agreed to put 11.2bn euros ($16.1bn; £8.9bn) into Fortis to save the bank.

However, European bank shares fell sharply on worries that other banks could have problems, and on concerns over the US $700bn bail-out plan.

One of the biggest casualties was Fortis' rival Dexia. Shares in the bank had plunged by almost a third at one stage after a newspaper report said that it was seeking extra funding.

A spokeswoman for Dexia, which acts as banker for French local government, insisted that the group was in no immediate danger of collapse.

The French and Belgian governments have already announced they will step in to support Dexia.

Savers 'not abandoned'

World stock markets fell on Monday even after the US $700bn bank bail-out deal. Investors are worried that cleaning up the mess of bad debts will affect economic growth for the foreseeable future.

As part of the weekend deal to rescue Fortis, the bank will have to sell its stake in Dutch bank ABN Amro which it partially took over last year. The Dutch government has not yet named any potential buyers.

Belgian Prime Minister Yves Leterme said the bail-out showed Fortis would not be allowed to fail, after its share price plunged in recent days.

Mr Leterme said: "We have taken up our responsibility, we did not abandon the savers."

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